Annual Report for Fiscal Year Ending 06-30, 2025 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. You should read the following discussion and analysis of financial condition and results of operations in conjunction with our financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K. In addition to historical information, the following discussion and analysis includes forward-looking information that involves risks, uncertainties, and assumptions. Our actual results and the timing of events could differ materially from those anticipated by these forward-looking statements because of many factors, including those discussed under "Item 1A. Risk Factors" and elsewhere in this Form 10-K. See "Cautionary Note Regarding Forward-Looking Statements" included elsewhere in this Form 10-K.

Overview

The following discussion highlights our results of operations and the principal factors that have affected our financial condition as well as our liquidity and capital resources for the twelve months ended June 30, 2025 and provides information that management believes is relevant for an assessment and understanding of the statements of financial condition and results of operations presented herein. The following discussion and analysis are based on our audited financial statements contained in this Annual Report on Form 10-K, which we have prepared in accordance with United States generally accepted accounting principles, or GAAP. You should read the discussion and analysis together with such financial statements and the related notes thereto.

We are not currently profitable, and we cannot provide any assurance that we will ever be profitable. We incurred a net loss of $3,617,086 for the twelve months ended June 30, 2025, and we incurred a net loss of $41,450,587 for the period from November 14, 2017 (date of incorporation) to June 30, 2025.

The assessment of the Company's ability to meet its future obligations is inherently judgmental, subjective and susceptible to change. Based on their current forecast, management believes that it will have sufficient cash and cash equivalents to maintain the Company's planned operations for the next twelve months following the issuance of these financial statements; however, there is uncertainty in the forecast and therefore the Company cannot assert that it is probable. The Company has considered both quantitative and qualitative factors that are known or reasonably knowable as of the date of these financial statements are issued and concluded that there are conditions present in the aggregate that raise substantial doubt about the Company's ability to continue as a going concern.

In response to the conditions, management plans include generating cash by completing financing transactions, which may include offerings of common stock. However, these plans are subject to market conditions, and are not within the Company's control, and therefore, cannot be deemed probable. There is no assurance that the Company will be successful in implementing their plans. As a result, the Company has concluded that management's plans do not alleviate substantial doubt about the Company's ability to continue as a going concern.

Basis of Presentation

The financial statements contained herein have been prepared in accordance with GAAP and the requirements of the SEC.

Critical Accounting Policies and Significant Judgments and Estimates

This management's discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reported period. In accordance with U.S. GAAP, we base our estimates on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Actual results may differ from these estimates if conditions differ from our assumptions. While our significant accounting policies are more fully described in Note 2 in the "Notes to Financial Statements," we believe the following accounting policies are critical to the process of making significant judgments and estimates in preparation of our financial statements.

Capitalized Software Costs

Pursuant to Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 350-40, Internal-Use Software, the Company capitalizes costs incurred in the development of its hosted SaaS (software as a service) software to be marketed for external use, including the costs of the software, materials, consultants, and payroll and payroll related costs for employees. Software development projects generally include three stages: the preliminary project stage (all costs are expensed as incurred), the application development stage (certain costs are capitalized and certain costs are expensed as incurred) and the post-implementation/operation stage (all costs are expensed as incurred). Capitalization of costs requires judgment in determining when a project changes stages and the period over which we expect to benefit from the use of that software. After the software is placed in service, these costs are amortized on the straight-line method over the estimated useful life of the software, which is three years.

Stock-Based Compensation

We have issued four types of stock-based awards under our stock plans: stock options, restricted stock units, deferred stock units, and stock warrants. All stock-based awards granted to employees, directors and independent contractors are measured at fair value at each grant date. We rely on the Black-Scholes option pricing model for estimating the fair value of stock-based awards granted, and expected volatility is based on the historical volatility of the Company's stock prices. Stock options generally vest over four years from the grant date and generally have ten-year contractual terms. Restricted stock units generally have a term of 12 months from the closing date of the agreement. Stock warrants issued have a term of five years. Information about the assumptions used in the calculation of stock-based compensation expense is set forth in Notes 4 and 6 in the Notes to Financial Statements.

Revenue Recognition

The Company recognized revenue in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606). Under this standard, revenue is recognized when control of goods or services is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company's performance obligation is to provide on demand information and documentation solutions to its customers by leveraging its proprietary technology on its hosted platform. The pricing for the customer contracts is based on a monthly fee.

We derive revenue from a hosted platform of tightly integrated technology and services. Our customers provide a variety of services for their employees or to paying customers or students using our platform. Our performance obligation is satisfied as the customers receive and consume benefits and distribute them as appropriate for all of these contracts. Our services are provided ratably over contract terms; accordingly, the revenues collected are recognized ratably over the service period (generally one month).

Available within Topic 606, the Company has applied the portfolio approach practical expedient in accounting for customer revenue as one collective group, rather than individual contracts. Based on the Company's historical knowledge of the contracts contained in this portfolio and the similar nature and characteristics of the customers, the Company has concluded the financial statement effects are not materially different than if accounting for revenue on a contract-by-contract basis.

The Company's revenue arrangements do not contain significant financing components. In addition, the Company elected the practical expedient to not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Sales commissions are incurred and recorded on an ongoing basis over the term of the customer relationship. These costs are recorded in sales and marketing expenses.

Results of Operations

Revenue

We generated revenues of $110,459 for the year ended June 30, 2025 as compared to $166,881 for the year ended June 30, 2024. Revenue compared to the prior year was primarily from license fee revenues related to the NurseMagic^TM app.

We have strongly pivoted to grow our customer base while reducing risk and losses, resulting in a larger client base, a short-term reduction in overall revenue and a dramatic reduction in cash burn. Larger, cash-upfront deals were struggling to produce sustainable revenue, as administrative barriers within nonprofits, high price points set by customers, and inability or unwillingness of customers to partner with schools, businesses and other entities to purchase products hampered growth. During the fiscal year ended June 30, 2025 we began to market and sell to individuals (B2C) which accounted for 24% of sales.

We continue to believe that AI-powered programs, priced affordably, will supplant other academic products in the mid to long term, but have defocused on securing academic customers, and are now offering solutions for the healthcare industry. We have focused all new development work on delivering AI tools to markets hungry for increased capability that immediately impacts both their performance and their bottom line. The NurseMagic^TM app is the first of these and has already gained traction with larger entities.

General and Administrative

General and administrative expenses consist primarily of personnel and personnel-related expenses, including executive management, legal, finance, human resources and other departments that do not provide direct operational services. General and administrative expenses also include professional fees and other corporate expenses.

General and administrative expenses for the year ended June 30, 2025, were $2,477,888 as compared to $2,908,289 for the year ended June 30, 2024. The decrease of $430,401 is primarily due to significant savings in the areas of employee payroll and Board of Directors compensation due to the resignation of two Board members in December 2024.

Technology and Content Development

Technology and content development expenses consist primarily of personnel and personnel-related expenses and contracted services associated with the ongoing improvement and maintenance of our platform as well as hosting and licensing costs. Technology and content expenses also include the amortization of capitalized software costs.

Technology and content development expenses for the year ended June 30, 2025, were $691,154 as compared to $1,074,328 for the year ended June 30, 2024. The decrease of $383,174 is primarily due to savings in employee payroll and lower capitalized software amortization.

Sales and Marketing

Sales and marketing expense consist primarily of activities to attract customers to our offerings. This includes personnel and personnel-related expenses, various search engine and social media costs as well as the cost of advertising.

Sales and marketing expenses for the year ended June 30, 2025 were $545,030 as compared to $763,915 for the year ended June 30, 2024. The decrease of $218,885 is primarily due to lower marketing costs and savings in employee payroll.

Interest Income

For the year ended June 30, 2025, interest income totaled $77,396 as compared to interest income of $176,469 for the year ended June 30, 2024 due to lower cash balances until the January 2025 public offering.

Interest Expense

We incurred no interest expense for the fiscal years ended June 30, 2025 and 2024.

Impairment Expense

During the fiscal years ended June 30, 2025 and 2024, the Company recognized impairment losses of $90,869 and $0, respectively, related to capitalized software in the accompanying statement of operations. The impairment was triggered by management's decision to discontinue development of the higher ed/professional learning app due to a shift in strategic focus to the NurseMagic™ app.

Net Loss

Our net loss for the year ended June 30, 2025 was approximately $3,617,000 as compared to a net loss for the year ended June 30, 2024 of approximately $4,403,000. The loss was approximately $786,000 lower during the year ended June 30, 2025 compared to 2024 primarily due to the significant savings in the areas discussed above offset by the impairment charge.

Capital Expenditures

During the years ended June 30, 2025 and 2024, we had capital asset additions of $378,300 and $375,866, respectively, which were all comprised of capitalized technology and content development. There were no significant additions to property and equipment for the fiscal years ended June 30, 2025 and 2024. We will continue to capitalize significant software development costs, comprised primarily of internal payroll, payroll related and contractor costs, as we build out and complete our technology platforms.

Financial Position, Liquidity, and Capital Resources

Overview

We are not currently profitable, and we cannot provide any assurance that we will ever be profitable, as indicated by our losses noted above.

During the period from November 14, 2017 (date of incorporation) to September 30, 2020, we raised net proceeds of approximately $11,760,000 from private placement financing transactions (stock and debt). On September 25, 2020, we completed the Offering of 250,000 shares of our common stock, $0.0001 par value per share, at an offering price of $60.00 per share (total net proceeds of approximately $12.8 million after underwriting discounts, commissions, and other offering costs).

On August 2, 2021, we entered into a purchase agreement (the "Purchase Agreement") with Lincoln Park Capital Fund, LLC ("Lincoln Park"), under which, subject to specified terms and conditions, we may sell up to $16.5 million of shares of common stock. Our net proceeds under the Purchase Agreement will depend on the frequency of sales and the number of shares sold to Lincoln Park and the prices at which we sell shares to Lincoln Park. On August 2, 2021, we sold 63,260 shares of our common stock to Lincoln Park in an initial purchase under the Purchase Agreement for a total purchase price of $1,500,000. We also issued 12,726 shares of our common stock to Lincoln Park as consideration for its irrevocable commitment to purchase our common stock under the Purchase Agreement.

On February 16, 2022, we closed on an offering of common stock and received approximately $2.51 million of cash proceeds, net of underwriting discounts, commissions, and other offering costs (Note 4 to the Financial Statements).

On September 1, 2022, we closed a public offering of 348,485 shares of common stock and a concurrent private placement of warrants to purchase 348,485 shares of common stock at a combined purchase price of $6.60 per share. The net proceeds to the Company were approximately $1.85 million.

On January 8, 2025, we closed on a public offering of our common stock and received approximately $3.08 million of cash proceeds, net of underwriting discounts, commissions and other offering costs.

As of June 30, 2025, our cash balance totaled $2,433,418.

In late fiscal year 2024, management determined to transition away from the Company's education-focused offerings and to pursue alternative AI-powered solutions. After evaluating several options, the Company selected what became NurseMagic™ (NM), which officially launched in June 2024. Initial NM sales were recorded in the second quarter of fiscal 2025. In February 2025, the product became available for online subscription, followed shortly thereafter by its release on Google Play and the Apple App Store. In April 2025, NM achieved HIPAA compliance, and the Company introduced NurseMagic™ Teams+, which contributed to accelerated customer adoption and revenue growth.

The table below illustrates the Company's strategic shift from its education platform to NM. Although revenues declined in fiscal year 2024 (and overall in fiscal 2025 compared to fiscal 2024), the Company experienced a turnaround in fiscal year 2025 as the NM customer base expanded.

FY-2024 and FY-2025 Quarterly Revenue

In July 2025, the Company introduced NurseMagic™ Enterprise, designed for larger-scale customers with features such as electronic medical record (EMR) integration, tailored compliance and billing documentation, and a patient census-based pricing model.

The Company is developing its customer base and has not completed its efforts to establish a stabilized source of revenue sufficient to cover its expenses. The Company has had a history of net losses and negative cash flows from operating activities since inception and expects to continue to incur net losses and use cash in its operations in the foreseeable future.